Gold overtakes Treasuries as global reserve asset

Gold gains weight as global reserve and bonds tighten

The US 10-year Treasury yield exceeding 5% and the 30-year hitting 5.348% have turned the past week into a serious warning for stock markets. Meanwhile, industry data indicates gold has risen to represent 27% of global reserves, compared to 22% for US Treasuries and 15% for the euro. This is not just any rotation: it confirms that central banks are reordering their safe-haven assets.

The debate over what is happening to the global monetary system has ceased to be the domain of doomsayers. Basel III elevated gold to Tier 1 Category, placing it on the same risk level as sovereign debt and cash. This allows institutions to treat it as a functional reserve asset, something unthinkable in risk management manuals until recently.

Gold gains weight as benchmark reserve

While the dollar strengthens —the DXY index reached 102.5, its highest level in nearly 18 months— gold has taken the lead as a global reserve asset. US reserves remain on the books at $42.22 per ounce since 1973 and have never been revalued. A revaluation at market prices would add $1.13 trillion to the balance sheet, according to circulating calculations.

China has intensified its purchases. In September, the People's Bank added 740,000 ounces to its reserves, marking the 23rd consecutive month of accumulation. Additionally, it has begun moving part of its gold reserves from London to Hong Kong, accelerating a trend some interpret as preparation for a different monetary scenario.

Bundesbank President Joachim Nagel noted that rising public debt levels reinforce the need for central banks to increase their gold reserves. This is not an isolated opinion: it is the realization that central banks are buying the metal as a hedge against sovereign credit risk.

US Treasuries tighten and drag down stocks

The yield on the US 10-year bond has exceeded 5%, with the 2-year at 4.516% and the 30-year at 5.348%. In Europe, the situation is described as an absolute disaster. Treasury Secretary Scott Bessent announced he would double the size of bond repurchase operations to support liquidity, a measure that boosted precious metals: gold rose $181 (4.2%) in a single session, the largest gain since February, and silver jumped 5.7%.

Ray Dalio warned that Tokyo and Beijing could soon stop financing US imbalances. "The Chinese don't want to keep accumulating wealth. There are geopolitical problems in addition to economic ones," he told Bloomberg. The dynamic between creditor and adversary, he notes, is very complex. Japan, for its part, has entrusted much money to US officials and now wants it back.

Michael Burry warned that the big short bet is about to repeat itself, with rates rising for six consecutive weeks and mortgage applications falling 6% in a single week. The US real estate market shows signs of exhaustion reminiscent of 2008.

Silver and copper: mineral scarcity, not metal

In the silver market, the discussion centers on whether there is actual scarcity. One participant summarizes it bluntly: "It is clear that there is no scarcity, strictly speaking, in Silver; otherwise, the price would be different." However, data from Chinese smelters point to the contrary: by late September, they were paying miners more than $230 per tonne of ore, not because of copper scarcity, but due to a shortage of ore containing silver.

Pan American Silver recorded an average selling price of $70.97 per ounce in the second quarter, with a total production cost of $17.80. A year earlier, it sold at $32.91 and spent $19.66 to produce it. Profit per ounce has gone from around $13 to around $53. These margins explain why mining companies trade at low valuations relative to cash flow.

Tech giants' hidden debt: $1.65 trillion

Financial statements from Alphabet, Amazon, Meta, Microsoft, and Oracle revealed hidden debt of $1.65 trillion —eight times higher in four years— in their rush to build data centers. Morgan Stanley and Moody's highlighted this issue in their reports. The Bank for International Settlements points out the parallel with the telecom boom of the late nineties.

The circularity of the financing is notable: "Despite different issuers, different structures, different rating agencies, and different credit markets, all the risk converges on just eight names," according to cited documentation. Meta, Oracle, Microsoft, Amazon, Google, Nvidia, and broadly OpenAI and Anthropic concentrate the risk.

Oil and the energy crisis that won't end

Brent crude is approaching $120, a forecast launched in July that now seems to be coming true. The bottleneck lies in refineries: large-scale destruction in Russia and the Middle East due to the wars in Ukraine and Iran is overloading those in the rest of the world, which operate without necessary maintenance shutdowns. The risk of severe breakdowns leaving them idle for months is real.

A cited analysis warns that damage to Gulf energy infrastructure is not a simple interruption ending with a ceasefire, but a reconstruction problem lasting years and costing trillions of dollars. The global economy is paying for a war it believes is ending.

Housing: from 1.4% to 200% in the EU

Housing prices in the EU have surged between 1.4% and 200% depending on the country, a phenomenon that cannot be explained solely by national causes. The popular explanation —greed among developers— does not withstand analysis: it is impossible for everyone to enter the same delirious state of greed simultaneously worldwide. It would require them to agree on their emotions regarding what con

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The analysis gets stuck at one point: if gold gains weight as a global reserve and US Treasuries tighten, why does the market continue buying stocks at exorbitant valuations? The answer, probably, is that no one wants to be the first to exit.